With Election Day now behind us, it is clear that the big winner in California was the governor, Jerry Brown. Brown had staked his entire credibility on the passage of his budget-helping measure Proposition 30, and he saw it pass by a comfortable margin. With the passage of Proposition 30, schools in California will now avoid a $450 per pupil cut in their budgets. The governor’s measure passed while Molly Munger’s initiative, Proposition 38, was defeated. Another big win for Brown was both houses of the legislature electing supermajorities of Democratic members. With this new supermajority, the Democrats will not have to negotiate with Republicans to pass legislation that requires a 2/3 vote, even after raising taxes. A clean sweep was completed for members of the Democratic coalition by the unions defeating Proposition 32, seen as an anti-union measure funded by special interests from outside of the state.
For election reformers, there were additional victories as Cheryl Brown defeated Joe Baca, Jr. in California’s 47th Assembly District, and Raul Bocanegra and Ian Calderon were elected to Assembly seats in Los Angeles – great news for those interested in the potential for increased charter school funding. Ms. Brown has a long history of supporting education reform efforts and her husband, Hardy Brown, is a longtime education reform advocate in California. She was supported by education reform and tribal interests and was the number one priority of the legislative Black Caucus. Bocanegra is a moderate who was a longtime Assembly staffer, and Calderon has already signaled that he will champion education reform issues in the Assembly. Overall, though the Assembly Democratic caucus is larger, it is also more moderate, which should be a good sign for education reform and charter funding throughout the state.
For more news about changes in charter school funding and information about financing your school, visit our blog.
Category: Legislative Updates
As Election Day draws near, the battle between Proposition 30 (the California governor’s tax plan to help balance the state budget) and Proposition 38 (Molly Munger’s education tax plan) is heating up – as is the ultimate impact on charter school funding in California. Munger has spent more than $30 million on her ballot measure and has started running commercials that are in opposition to the governor’s efforts. Meanwhile, the governor has also raised millions of dollars for his measure and has vowed to begin non-stop campaigning.
If this were not enough to make for an interesting finish to the campaign season, a few additional factors are at play. Munger’s brother, Charles Munger, Jr., is funding an independent expenditure committee that is also spending money against the governor’s ballot measure. With all of the dollars being spent on competing campaigns, both measures are polling below 50%, which means it’s possible that education could get no additional money from taxpayers, charter school funding will be impacted, and the state budget will still be wildly out of balance after the election. All of these factors have led to Carol Kocivar, the head of the PTA and backer of the Munger proposition, to try to broker a peace treaty between the governor and Molly Munger. The effort has not been successful in either camp.
In the backdrop of all of this is Proposition 32, which the state’s unions are heavily opposing. Prop 32 would place severe limits on organized labor’s ability to contribute to candidates and campaigns, and would restrict their ability to collect union dues for political purposes. Defeating the measure is the union’s number one priority, and the money spent to fund the opposition is money that would otherwise go to support the governor’s ballot measure.
For charter schools preparing school budgets, we suggest they budget conservatively with the assumption that neither Prop 30 nor Prop 38 passes. The general consensus in the world of political consultants is that with the campaigns deepening their opposition, it will be difficult for either measure to pass.
For more information on how the California state budget may impact charter school funding, see Understanding the California State Budget Impacts on Charter School Funding, a recent Charter School Capital post.
UPDATE: As of October 15, Molly Munger pulled one ad attacking Proposition 30, according to the LA Times.
Last Friday, August 31, the California legislature adjourned for the year, completing their work on several controversial issues in the 2011-12 legislative session. For charter school supporters and advocates, there were a few pieces of legislation that may affect your interests – specifically those which may affect financing California charter schools. All of the following measures are currently on the Governor’s desk awaiting his signature or veto.
AB 1594 by Assemblyman Eng mandates charters schools to gradually begin to participate in the Free and Reduced meals program if they have eligible students (though non-classroom based charter schools are exempt.) This bill follows a state-wide audit mandated by legislators to determine whether or not charter schools have been participating in this program.
AB 1811 by Assemblywoman Bonilla deals with conversion charter schools and their funding rates. This has been a long-running issue on which legislation is usually proposed every few years. AB 1811 says that once the school converts into a charter school, it cannot receive more funding than it would have gotten if it continued as a traditional public school. Conversion funding rates are an issue for the state, because some policymakers believe that some schools only converted in order to qualify for the higher level of funding (depending on the grade level span) and ultimately receive more financing for California charter schools from the state.
AB 1919 by Assemblywoman Brownley deals with access to student data and the access to that data by the authorizer. Amendments were taken to ensure that the bill complies with FERPA (and ensure the protection of the student’s and parent’s rights).
SB 1290 by Senator Alquist makes reaching pupil growth targets the most important part of charter school renewal from all of the different subgroup targets. The bill is sponsored by the Department of Education and backed by the US Department of Education. The Federal Government claims that the state has to make the change to continue to be eligible for the charter school start-up grant. This leaves to question whether or not the State Board of Education can draft regulations to make the change, therefore making legislation unnecessary.
To view any of these bills in their entire form visit http://www.leginfo.ca.gov/bilinfo.html and type in the bill number in the search bar. For more information about financing California charter schools, visit our blog.
Much of the current education discussion in California today is focused on the upcoming tax increase initiative, Prop 30, and what may happen to funding for California charter schools if the initiative doesn’t pass.
However, the issue that isn’t being discussed – and has an immediate impact on charter schools’ cash flow – is a 21.2% reduction in what schools typically receive during the school year. This will severely impact California charter schools this year, regardless of November ballot results. Schools need to be aware of this general purpose entitlement payment delay and the impact it will have on their budgets.
If Prop 30 passes, this 21.2% reduction is not a cut in funding, but a delay in payment that’s referenced in state law as an “offset.” If Prop 30 passes, it operates like an additional deferral of payments on top of current deferrals already in place. Schools should understand that the 21.2% amount is not taken all at once. Instead, it’s a 21.2% reduction in amounts that otherwise would be paid to schools on a monthly basis. This reduction will come first from money that normally would be transferred to schools by the state. The impact on the amount and timing of the local in-lieu funding may vary by school district or county.
With schools now having to account for an additional 21.2% cash flow reduction of their general purpose entitlement funding, many will be scrambling to rethink their budgets. This delay is roughly one-fifth of a school’s budget that will not be delivered when school administrators are expecting it—and it would be received in late June of 2013 at the earliest.
This cash flow reduction did not seem to be part of the public discussion about the budget during the initial negotiations. As is typical, the detail first appeared in the budget trailer bill that came together very quickly at the end of the session and assumes that the Prop 30 tax increase initiative will pass in November.
While the reduced funding is taking place now, there are several potential scenarios (given these is no mid-year legislation) that can take place contingent upon whether certain initiatives pass or don’t:
- If only Prop 30 passes: There should be no additional funding or cash flow reductions or deferrals. The new tax revenues would accumulate in the “Education Protection Account” instead of the State’s General Fund. Funding for California charter schools in the “Educational Protection Account” will be paid next June.
- If Prop 30 and Prop 38 don’t pass: There will be a substantial cut in general purpose entitlement funding (the so-called trigger cuts) and more substantial deferrals during the P-1 (first principal apportionment) payment periods. Many are suggesting that the state’s legislature will likely enact mid-year budget amendments to avoid these cuts and deferrals.
- If only Prop 38 passes: If this initiative passes, it’s not clear what may happen with funding timing and amounts. There isn’t enough detail in the ballot language currently, so some sort of implementing legislation seems likely.
- If both Prop 30 and Prop 38 pass: What happens will depend on how the differences in the two initiatives are reconciled. It’s our understanding that the initiative that receives the most votes will be implemented and the other initiative will not be effective. Anything other than simply implementing Prop 30 would seem to require some legislation and could cause further delays or deferrals, impacting school’s cash flow.
It’s difficult-to-impossible to completely map out all implications of these two tax initiatives, in large part because mid-year budget legislation seems likely under many of the possible scenarios.
The impact of this additional reduction in funding for California charter schools is very real and will undoubtedly be painful. Charter School Capital is moving quickly to inform charter schools so they can begin to plan contingencies and budget for the cash flow shortfalls. School administrators need to be aware, understand the impacts and plan accordingly.
To help educate our clients, we are holding a series of informational webinars specifically to discuss the impact of the state funding reductions on charter schools. This will provide timely and actionable information regarding the impacts of this reduction in funding for California charter schools. Our first webinar is scheduled for Friday, August 24 for Charter School clients. We will hold additional webinars for in the coming weeks. If you would like to receive information, please register here.
UPDATE: To access the presentation from our August 24th webinar, please go
here:https://www.slideshare.net/CharterSchoolCapital/charter-school-capital-california-budget-impact-on-charter-schools or check out the slides below.
Yesterday, Senator Elaine Alquist amended her bill SB 1290 to change how charter schools are renewed in California. This may affect funding for California charter schools, should they not meet the new qualifications to renew. The bill proposed by Senator Alquist states that charters must meet their Academic Performance Index (API) growth target overall, as well as for each of their subgroups, in order to qualify for renewal of their charter school status. (To view the bill, go to www.leginfo.ca.gov, click on the ‘Bill Information’ link, and type in ‘SB 1290’ in the search bar.) The bill is being sponsored by the California Department of Education, while other opinions are mixed. The California Charter Schools Association is neutral on the measure, but a number of individual lobbyists and education reform advocates are opposed to it and fighting against it. The bill will be heard in the Assembly Education Committee next Wednesday at 1:30 PM. To voice your opposition to Senator Alquist’s attempts to re-regulate and change funding for California charter schools, please contact her office via telephone at (916) 651-4013 or fax at (96) 324-0283.
Tuesday, June 5th was Election Day, and the results may have an impact on funding for charter schools in California . This election was the first time California saw its new top-two primary voting system go into effect. Under the new system, the two candidates who receive the most votes, regardless of political affiliation, advance from the primary to the general election (as opposed to the top-two vote getters from differing political parties). Voters enacted the new system with the hope that more moderate candidates would be elected to the California State Legislature, and our state politics would become less polarizing. This new system also allows moderate groups an opportunity to be more successful when attempting to elect legislative candidates. Redistricting that was done a decade ago had led to various unions and business groups in zones that supported the Democratic and Republican candidates respectively, meaning there were few, if any, moderates who were being elected from either party to the state legislature.
With this in mind, the education reform community in California fared relatively well on election-day in the two legislative races in which they supported specific candidates. In the 57th Assembly District, Democrat Ian Calderon defeated Democrat Rudy Bermudez, enacting a general matchup with a Republican in November that Calderon is projected to win. He has been outspoken about the need to reform our current education system in California, and was heavily funded by a host of education groups throughout the state. In the 46th Assembly District, Democrat Brian Johnson, a Teach For America alumnus and former charter school executive director, is currently on pace to join another Democratic candidate in the November general election. Johnson holds a slim 82 vote lead over the Republican candidate in the race, who finished a close third in the balloting. This is sure to trigger a recount, but if Johnson can hold on, it will mean yet another victory for education reform groups. Like Calderon, Johnson was heavily backed. If both Calderon and Johnson are victorious come November, it could mean a much-needed increase in funding for California charter schools. To find out more about charter school financing options, visit our website.